Eurozone business activity surged in September, with the composite PMI reaching 53.1, as Germany and France returned to growth, forcing the ECB to weigh stronger economic resilience against persistent inflationary pressures.
Stronger eurozone PMI and ECB rate hike expectations support the euro.
The eurozone economy shows unexpected resilience as the composite PMI climbed to 53.1 in September, marking the highest level since April 2023. While the expansion in services and manufacturing signals a robust recovery, rising input costs and stronger demand complicate the European Central Bank's inflation outlook, likely keeping interest rates higher for longer.
Stronger-than-expected economic growth and rising business costs suggest the economy can withstand higher rates, while simultaneously increasing the risk that energy-driven inflation could become more entrenched.